Manufacturing, outsourcing jobs to help India drive world economic growth, raise incomes, boost consumption – MS

India has the potential to turn into the world's third largest economy, driving a fifth of  the world's economic growth in the next decade - significantly  rising from 14.7% in the last ten years. The primary factors that will contribute to this boom are an increased focus on India's manufacturing capabilities and outsourcing of jobs to India, which in turn will fuel discretionary consumption spending as incomes rise, Morgan Stanley said in its recent report 'Why This Is India's Decade'.

·         Outsourcing to boost job creation, domestic consumption A large number of global jobs were outsourced and  offshored to India during the pandemic, so companies could save on labor costs. Global captive centers grew and employment rose significantly. Morgan Stanley said offshoring is a structural change, since the labor skills, lower wages and higher productivity has led to many large companies setting up permanent captive centers.

·         This could mean that India's large talent pool will benefit greatly from the influx of jobs and give India a large share in global IT services expenditure. As the jobs in the service industry grow and India moves on from the primary  sector, challenging the assumption that India's growth is a jobless growth, Morgan Stanley believes that the per capita income will increase from $2200 today to $5200 by 2031.

·         Manufacturing gaining pace too, finally However, the services sector and outsourcing aren't the only factors that will contribute to India's large-scale growth. The manufacturing sector in India has traditionally played an important role in the economy and contributes 15% to the GDP. While the report believes that the sector's contribution to the GDP will increase to 21% by the next decade, the government wants it to contribute 25% by 2025 and launched significant reforms to foster the sector's advancement.

·         The PLI schemes launched by the government focus on vital sectors seeing rising demand or essential to building manufacturing capacities. Some sectors that have seen great government involvement are semiconductors, textiles, autos & drones, along with large scale electronic manufacturing. The government has also cut the corporate tax rate and incentivized new manufacturing firms to boost manufacturing.

·         Their labor reforms provide healthier working conditions, the logistics  portal reduces the costs of logistics, while all permits for  construction have been simplified and are issued within stringent deadlines.